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Changes to Federal Student Loans from the One Big Beautiful Bill Act
How the One Big Beautiful Bill Act Affects Federal Student Aid
The One Big Beautiful Bill Act was signed into law on July 4, 2025 and introduces significant changes to federal student aid. The Department of Education has not yet issued a final version of the regulation. We are awaiting guidance on implementation and are closely monitoring how these changes will impact our students and families.
Key Updates to Federal Loans
The new law introduces changes to how students and families finance higher education. Below are the important updates that are effective July 1, 2026, and will impact Dean College families:
- Parents of dependent undergraduate students who take out the Direct Parent PLUS loan will now have an annual borrowing limit of $20,000 per student and a lifetime limit of $65,000 per student.
- A new income-driven repayment plan called the Repayment Assistance Plan (RAP) will be introduced. For new borrowers, this and a new standard repayment plan will be the available options.
For Dean College students who plan to pursue graduate studies, they should be aware that the Graduate PLUS Loan program, which allowed graduate and professional students to borrow up to the full cost of attendance, has been eliminated for new borrowers.
Legacy Provisions
The following legacy provisions apply to current borrowers who take out a federal student or parent loan before July 1, 2026. This means that if you have a Direct Parent PLUS Loan disbursed before July 1, 2026, while your student is enrolled in a program, you may be able to continue to borrow for up to three academic years or until the end of the program, whichever comes first.
Current Loan Borrowers
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The annual Federal Direct Subsidized and Unsubsidized Student Loan borrowing limits remain the same.
- Parent PLUS borrowers may continue borrowing under the previous annual and lifetime limits for up to three academic years or until the end of their student’s program, whichever comes first.
New Loan Borrowers
The following regulations apply to new borrowers who take out their first federal student or parent loan as of July 1, 2026.
- The annual Federal Direct Subsidized and Unsubsidized Student Loan borrowing limits remain the same.
- Parent PLUS Loan borrowers now have an annual borrowing limit of $20,000 per student and a lifetime aggregate limit of $65,000 per student.
Important Notes:
- Undergraduate student loan limits remain the same, but the One Big Beautiful Bill Act also introduced a new loan pro-ration that will impact eligibility based on the credits the student is enrolled in annually. Students should consult with SFP prior to dropping courses to fully understand the impact on available borrowing.
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The implementation date of July 1, 2026, applies to when loan funds are disbursed. This means the first disbursement of the loan needs to be prior to this date to be eligible for the legacy provisions. Families taking out their first loan for the 2026-27 academic year will have loans disbursed in September of 2026 regardless of when the loan is applied for or approved.
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For parents planning their annual borrowing, the $65,000 lifetime limit considered equally over a 4-year undergraduate program would actually be $16,250 per academic year. If a parent borrows the maximum of $20,000 per year for the first three years, their borrowing in the final year would be limited to the $5000 remaining in the lifetime limit.
What Can You Do Now?
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Review your current loans. Log in to studentaid.gov to check your borrowing history and lifetime totals.
- Understand the transition rules. Borrowing before July 1, 2026, may allow continued access to current loan options for a limited time.
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Budget carefully. With lower federal loan limits for some students, consider exploring private loan options, scholarships, payment plans, and other possible funding options.
- Stay informed. SFP will continue to provide updates as the Department of Education releases details.
The implementation of these changes is a fluid situation. The Department of Education has not yet provided operational guidance to institutions. Student Financial Planning will keep the Dean College community up to date as new information becomes available.
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